Instructions

ZOOM IN by clicking on the page. A slider will appear, allowing you to adjust your zoom level. Return to the original size by clicking on the page again.

MOVE the page around when zoomed in by dragging it.

ADJUST the zoom using the slider on the top right.

ZOOM OUT by clicking on the zoomed-in page.

SEARCH by entering text in the search field and click on "In This Issue" or "All Issues" to search the current issue or the archive of back issues
respectively.
.

PRINT by clicking on thumbnails to select pages, and then press the
print button.

SHARE this publication and page.

ROTATE PAGE allows you to turn pages 90 degrees clockwise or counterclockwise.Click on the page to return to the original orientation. To zoom in on a rotated page, return the page to its original orientation, zoom in, and
then rotate it again.

CONTENTS displays a table of sections with thumbnails and descriptions.

ALL PAGES displays thumbnails of every page in the issue. Click on
a page to jump.

looking – they are evaluating the company and
their future prospects.
So how can we know if the company is dealing
with climate change or climate risks, and how
does that affect future returns if we only have
backward looking data?
This is where the use of big data within the
investment process comes to the fore. One
relevant data point may be the amount of
research and development (R&D) that companies
are doing in relation to green innovations. These
innovations include battery storage, alternative
fuel sources and carbon capture. This information
can be indicative of how seriously a company
is treating the potential risks and opportunities
in this space. Although aggregated total R&D
dollars may be available in the annual reports,
details of these investment are hard to ascertain.
By gathering information from patent offices
globally, mapping these back to companies and
using World Intellectual Property organisations
green patent classifications we can get ‘under the
hood’ of these numbers and see where this R&D
money is being spent. In the past, companies with
similar emission numbers may have previously
been analysed as quite similar, but this new
information can clearly identify companies that
are thinking about, and addressing, climate risk
and opportunities.
Another example where big data is assisting the
ESG integration efforts is in relation to employee
satisfaction. Rather than obtaining data from
employee surveys, which are often sporadic and
inconsistently reported, we can use social media
to continuously determine employee satisfaction
within a company—by monitoring conversation
about work online—and have a broad measure to
compare companies. These measures are timely
and important in nature. For example, companies
that have gone through significant restructures
may have had their employee ratings change
which gives us insights as to how the ‘insiders’
are viewing these strategic changes. Big data
allows us to go beyond the official numbers and
information reported by companies, and gives a
more complete picture.
Consideration of ESG is increasingly important
in equity investing. The field continues to evolve,
giving investors more choices than ever before.
Historically, we have applied simple screens to
achieve our ESG outcomes. This has evolved
into optimising ESG exposures, and now also
includes Impact Investing where ESG outcomes
are specifically targeted with financial objectives.
The increasing use of big data has revolutionised
ESG investing, as we gain a better understanding
of how companies are behaving and the potential
outcome of behaviours, allowing a more complete
assessment of the risk and opportunities that ESG
factors present.
Joanna Nash is head of sustainable investing for
BlackRock Australia.
Superfunds December 2017